CPP investments highlights strong growth amid market volatility, adding $28.3bn in net assets
Canada Pension Plan Investment Board (CPP Investments) concluded its second quarter of fiscal 2025 on September 30, reporting net assets of $675.1bn.
This marks an increase of $28.3bn from the $646.8bn recorded at the end of the previous quarter. The growth includes $23.1bn in net income and $5.2bn in net transfers from the Canada Pension Plan (CPP).
The Fund, comprising the base CPP and additional CPP accounts, achieved a quarterly net return of 3.6 percent. Over the fiscal year-to-date period, net assets grew by $42.7bn, including $29.3bn in net income and $13.3bn in net transfers.
The Fund’s 10-year annualized net return remained at 9.1 percent. Since its inception in 1999, CPP Investments has contributed $461.7bn in cumulative net income to the Fund.
John Graham, president and CEO of CPP Investments, stated that despite market volatility, the diversified portfolio delivered stable returns across asset classes and geographies. He emphasized a long-term focus on value creation for CPP contributors and beneficiaries.
Rising US equity prices and fixed income gains supported quarterly performance. Infrastructure and credit investments also contributed positively.
However, the Canadian dollar’s appreciation against the US dollar negatively impacted foreign exchange returns.
The base CPP account’s net assets grew to $626.1bn by the end of the second quarter, reflecting an increase of $22.5bn. This growth included $21.4bn in net income and $1.1bn in net transfers.
The quarterly net return was 3.5 percent, and the five-year annualized net return was 8.0 percent.
The additional CPP account recorded $49.0bn in net assets, up by $5.8bn. This includes $1.7bn in net income and $4.1bn in net transfers. The quarterly net return was 3.7 percent, and the five-year annualized net return was 5.1 percent.
The additional CPP account's distinct legislative funding profile and contribution rates contribute to its differing investment and performance characteristics compared to the base CPP.
The Office of the Chief Actuary of Canada reaffirmed the long-term sustainability of the CPP in its triennial review published in December 2022. The review projects a long-term average annual real rate of return of 3.69 percent for the base CPP and 3.27 percent for the additional CPP.
CPP Investments held public meetings across Canada to engage with contributors and beneficiaries. A virtual national meeting is scheduled for November 21, 2024.
Graham was appointed chair of FCLTGlobal's board of directors. Additionally, Chief Sustainability Officer Richard Manley joined the inaugural Steering Committee of the Greenhouse Gas Protocol.
Second-quarter highlights
Key transactions during the quarter included:
- Exiting a 6 percent stake in Delhivery for $298m.
- Investing in various credit facilities, such as US$140m in a commercial mortgage-backed security for Bronx Terminal Market.
- Allocating $532m to Brazilian water company Iguá Saneamento.
- Committing $500m to a real estate investment vehicle with PAG’s SCREP VIII.
Post-quarter transactions
Subsequent activities included:
- A US$250m investment in Antares Private Credit Fund.
- Signing agreements for Nord Anglia Education’s acquisition valued at US$14.5bn.
- Investing US$100m in PowerSchool’s acquisition financing and US$115m in Stone Canyon Industries.
